Fungi in the genus Cercospora produce cercosporin, a potent singlet oxygen (¹O₂)-generating photosensitizer that plays a critical role in the ability of these fungi to parasitize plants. Although plants, mice, bacteria and many fungi are sensitive to cercosporin, Cercospora species are resistant to its toxicity. The cellular resistance of these fungi to cercosporin has been correlated with fungal cell surface reducing ability and the ability to maintain cercosporin in a chemically reduced state. As a model for reduced cercosporin we employed a reduced, acetylated derivative (hexaacetyl-dihydrocercosporin, HAC) that we tested for ¹O_{2 production in a range of solvents. We found that as a ¹O2 photosensitizer, HAC was only moderately effective in organic solvents (ϕSO = 0.14–0.18) and very poor in water (ϕSO = 0.02–0.04). By contrast, the ¹O2 quantum yield of cercosporin itself was unaffected by solvent (ϕSO = 0.84–0.97). To investigate the localization of reduced cercosporin in fungal cells, we developed a fluorescence assay using laser scanning confocal microscopy. This assay showed a uniform green fluorescence, indicative of reduced cercosporin, in the cytoplasm of hyphal cells treated with cercosporin. We hypothesize that the main protection mechanism against cercosporin phototoxicity in the fungus consists of transformation of cercosporin to a reduced state and localization of this reduced form in the aqueous compartment of the cell, thus decreasing intracellular ¹O2 production to levels that can be tolerated by the fungus. In addition, we have, for the first time, directly detected ¹O2 phosphorescence from fungal culture, either stained with the photosensitizer rose bengal or actively synthesizing cercosporin, demonstrating ¹O2 production in vivo and from cercosporin in culture.}